Analysts showing appetite for Restaurant Brands International

The $US12 billion merger between Burger King Worldwide Inc. and Tim Hortons Inc. late last year has already paid off nicely for investors who own shares in the new combined entity known as Restaurant Brands International Inc.

The $US12 billion merger between Burger King Worldwide Inc. and Tim Hortons Inc. late last year has already paid off nicely for investors who own shares in the new combined entity known as Restaurant Brands International Inc.

But the stock, which is up 16 per cent since its debut, has even more room to run over the next year, says Patricia Baker, analyst at Scotia Capital Inc.

“In our view, by bringing the two iconic Burger King and Tim Hortons brands together under a single larger platform, the company should be able to create more value than either brand could going it alone,” said Patricia Baker, analyst a Scotia Capital Inc.

Baker initiated coverage on Restaurant Brands this analyst with a sector outperform rating and one-year target price of US$48 per share, which represents potential upside of about 24 per cent.

She said Restaurant Brand’s fully franchised model has many advantages and the structure provides a series of benefits for the company.

As a result, she expects the stock to achieve a multiple that is at a modest premium to its peers, “reflecting the significant potential growth inherent in this business combination.”

Baker is one of six analysts who rate Restaurant Brands a buy (or outperform), while eight others have hold recommendations.

Just one analyst recommends selling (underperform) the stock and the average target price is US$44.